XCHRX AQUA-LEISURE INDUSTRIES INC AND ANOTHER v. AQUA SPLASH LTD.

1998 HCA No. 18928

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

____________

____________

_________________________

REASONS FOR JUDGMENT

_________________________

Introduction

1. On 29th April, I heard an application by the Defendant's solicitors under Ord. 67 r. 6(1) for an order declaring that they had ceased to be the solicitors acting for the Defendant in this action. I granted that application, but since it raised a point of some importance, I said that I would reduce my reasons into writing. This I now do.

The reasons for the termination of the solicitors' retainer

2. The reason why the solicitors sought to come off the record was because the Defendant had recently terminated their instructions. What caused me some concern was that the solicitors' application was being made just over 3 weeks before the date fixed for the trial of the action. The trial is estimated to last 5 days, and there is still much work to be done. That is because a speedy trial of the action was ordered on 12th February, and that has meant that the solicitors on both sides have had to work within a considerably shorter time-scale than usual to get the action ready for trial. These efforts could be frustrated if, so soon before the trial of the action, one of the parties was no longer represented by solicitors.

3. It was, no doubt, for these reasons that the Law Society has advised its members that they should not wait until shortly before a substantive hearing before applying for a declaration under Ord. 67 r. 6. The circular, no. 98-128(PA), which was issued on 11th May 1998, reads:

"The Registrar [of the High Court] has advised the Law Society that a substantial number of applications pursuant to Ord. 67 r. 6 are made 'very shortly before the date fixed for a substantive hearing'. The Registrar has stated that, in future, solicitors may encounter difficulties in obtaining orders to withdraw '... if the application is made less than 2 working weeks before the date fixed for a substantial argument.'"

Prompted by the thinking which lay behind this circular, I asked the Defendant's solicitors at the hearing before me whether the Defendant had given any reasons for the late termination of its solicitors' retainer. Might it have been the case, for example, that the Defendant had suddenly been confronted with a demand for sums on account which it had not been able to find quickly, but which it would have been able to pay if it had been given advance warning of the need to place the solicitors in funds? If that had been what had happened, I would have been minded to refuse to make the declaration sought. Such a course would have been entirely in accordance with the thinking behind the Law Society's circular. As it was, Ms. Vera Leung of the Defendant's solicitors who made the application informed me that it was simply a case of the Defendant deciding that it did not want to spend more money on legal fees for this litigation. I therefore made the declaration sought.

Are the reasons relevant?

4. However, the question arises whether it was appropriate for the court to investigate the matter along the lines envisaged by the Law Society's circular. The answer lies in the actual language of Ord. 67 r. 6(1), which reads:

"Where a solicitor who has acted for a party in a cause or matter has ceased so to act and the party has not given notice of change ... or notice of intention to act in person ..., the solicitor may apply to the Court for an order declaring that the solicitor has ceased to be the solicitor acting for the party in the cause or matter ..."

The fact that an application under Ord. 67 r. 6(1) needs to be made only if certain notices have not been given suggests that the rule has a limited purpose only, and does not allow the court to consider whether the relationship of solicitor and client should continue or be terminated. This view was forcefully expressed by the High Court of Australia in Plenty v. Gladwin (1986) 67 ALR 26, when dealing with the identical rule in Australia. The rule was held to be concerned

"... with the record of the court and with the service of documents. It comes into play when, rightly or wrongly, a solicitor has ceased to act and the party has not given notice of change of solicitor or notice of intention to act in person. The solicitor may then take steps to have his name removed from the record ... the court has a discretion whether or not to make the order, but unless there are special circumstances which render it expedient to retain the solicitor on the record the order will generally be made as a matter of course upon proof that the solicitor has in fact ceased to act for the party and that no steps have been taken to take the solicitor's name off the record. [The rule] makes it plain that an order made under the rule does not affect the rights or liabilities of a solicitor and a party as between themselves."

I agree entirely with these observations. It is therefore difficult to see why solicitors should "encounter difficulties" simply because the application is made very close to trial. Provided that documents can be served by or on their former client, the proximity of the trial cannot justify denying to solicitors a declaration of the kind contemplated by Ord. 67 r. 6(1).

The service of the summons

5. Two points arise on the service of the Defendant's solicitors' summons under Ord. 67 r. 6(1). First, it was served on the Plaintiffs' solicitors. That is not an appropriate course to take: Re Creehouse Ltd. [1983] 1 WLR 77. Other parties to the litigation are not entitled to be given notice of the application, or to make representations on it. It is because they have no legitimate interest in the application, that Ord. 67 r. 6A provides that the leave of the court is required before the affidavit or affirmation filed in support of the application can be inspected.

6. Secondly, Ord. 67 r. 6(2) provides that, unless the court orders otherwise, the summons must be served on the party for whom the solicitors acted. That is an important provision. It gives the party the opportunity to dispute his solicitors' assertion that their instructions have been withdrawn. In the present case, the solicitors purported to serve the summons

(a) by post at the registered office of the Defendant as is permitted by section 356 of the Companies Ordinance (Cap. 32), and

(b) by fax to its fax no.,

on the day prior to the hearing before me. As for (a), by section 8 of the Interpretation and General Clauses Ordinance (Cap. 1), service of a document by post is deemed to have been effected at the time at which it would have been delivered in the ordinary course of post. Unfortunately, there was no evidence before me as to when on the day before the hearing the letter enclosing the summons was posted or when it would have been delivered in the ordinary course of post. There was, therefore, no material on which I could find that service by post had been effected. As for (b), service by fax is, rather surprisingly, not a method of service which the Rules of the High Court recognise, even though Ord. 65 r. 5(1) of the Rules of the Supreme Court in England was amended as long ago as 1990 to permit service by fax. I appreciate that service can be effected in such other manner as the court directs, but by the time of the hearing the court had not made a direction for service of the summons by fax. It follows that the summons had not been served on the Defendant. However, in the light of the documents exhibited to the affidavit in support of the application, I was satisfied that the Defendant had indeed terminated its instructions to its solicitors, and I therefore directed, as permitted by Ord. 67 r. 6(2), that service of the summons be dispensed with.

The recording of this judgment

7. Although this application was heard in chambers, I give permission for this judgment to be reported so that the views expressed in it can be given a wider currency. However, it should not be made available to anyone other than the Defendant and its former solicitors until the trial of the action has taken place.